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Treasury to cover cost of student support reforms

The Treasury will pay for many of the reforms to student support proposed by
the government, leaving universities £1 billion better off as a result of
the changes.

During the second reading of the higher education bill this week, Charles
Clarke, the education secretary, said public funding would not be cut in line
with the private income raised by increasing tuition fees.

Alan Johnson, the higher education minister, told Parliament: "The announcement
made by (Mr Clarke) on January 8 (during the bill's first reading) - what is now
a grant of £2,700, a 25-year cap and an in-crease in the loan - does not
affect one iota the money for universities in this package. The universities
will still get the £1 billion.

"The money for deferring up-front fees, the money for grants and higher
threshold, and support for part-time students will all come from the
chancellor. The extra money for the maintenance grant and the 25-year cap will
come from the higher education budget."

Sources at the Department for Education and Skills confirmed that the Pounds
140 million had been found by "reprioritising" the higher education budget to
pay for an additional £500 per student eligible for the new £1,500
grant element.

The £1,000 component of the grant, originally announced in the higher
education white paper, is covered by the existing spending review cash received
from the Treasury.

Sources said that the reprioritisation of money would not affect the budget for
higher education. The capping of the repayment period to 25 years is projected
to cost £35 million.

The cost of paying the existing fee waiver of £1,125, likely to be Pounds
1,200 when fees are introduced in 2006 as a grant, is more or less neutral in
accounting terms since the amount of loan (and so the amount the government has
to pay out on loans) available to those getting the full fee grant is reduced
by £850.

Shadow education secretary Tim Yeo said this week: "When the government
introduced tuition fees in 1998, it clawed back the extra money universities
had received in fees, so that last year funding per student was lower in real
terms than before the fees came in."

He warned: "There is no certainty that the costs the government has committed
itself to - which exceed the money universities will receive in tuition fees
-will be met other than by clawing it back from the higher education
budget."